9th Circuit sides with states in Kalshi gambling fight, potentially reviving Arizona's prosecution

Live updates

1. 11d ago

   9th Circuit labels Kalshi sports markets as gambling

   The Ninth Circuit Court of Appeals ruled that Kalshi sports contracts constitute sports betting, stripping the platform of federal shields used to block state oversight. This decision prohibits prediction markets from offering sports event contracts in Nevada and may revive a prosecution led by Arizona Attorney General Kris Mayes. The court explicitly stated that Kalshi has a gambling problem, rejecting the company's premise that its offerings are regulated exchange contracts rather than wagers. The ruling likely sets the stage for a Supreme Court challenge next year.

   Why it matters

   Prediction markets attempt to operate as financial exchanges to avoid strict state gambling laws. This legal battle determines whether these platforms can bypass state regulations by claiming their contracts are swaps or regulated financial instruments.

   What is confirmed

   • The Ninth Circuit Court of Appeals found Kalshi sports contracts amount to sports betting.
   • Prediction markets are barred from offering sports event contracts in Nevada.
   • The court ruled that sports betting is not shielded by the federal law previously used to block Kris Mayes' prosecution.

   Still unconfirmed

   • New Jersey has until Thursday to ask the U.S. Supreme Court to review a Third Circuit decision protecting Kalshi sports event contracts.
   • The case will land before the Supreme Court next year.

   What to watch next

   • New Jersey's decision to petition the Supreme Court by Thursday.
   • Arizona's move to resume prosecution of Kalshi.
   Sources used for this update (5)

   1. www.techspot.com — A federal court just ruled Kalshi's sports markets are basically sports betting
   2. news.bitcoin.com — Ninth Circuit Ruling Sets Up a Kalshi Supreme Court Fight on Sept. 3
   3. finance.yahoo.com — Kalshi Says It's a Prediction Market. The 9th Circuit Says It's Gambling.
   4. ictnews.org — 9th Circuit sides with states in Kalshi gambling fight, potentially reviving Arizona’s prosecution
   5. www.sportsbusinessjournal.com — Federal appeals court says ‘Kalshi has a gambling problem’
   confidence 90%
2. 16d ago

   9th Circuit Rules States Can Regulate Prediction Markets as Gambling

   The 9th Circuit Court of Appeals ruled that U.S. states have the authority to regulate prediction markets as gambling. The decision prevents Kalshi from blocking oversight by Nevada and may revive a prosecution in Arizona. The court specifically found that Kalshi sports bets are not swaps, but are gambling under a different name. This ruling removes a key legal shield for prediction platforms and likely sets the stage for a challenge at the Supreme Court.

   Why it matters

   Prediction platforms previously operated under licenses from a federal commodity regulator to avoid state gaming board oversight and gambling taxes. This legal conflict represents a struggle between these platforms and the established casino industry.

   What is confirmed

   • The 9th Circuit Court of Appeals ruled that states can regulate prediction markets as gambling.
   • The court ruled that Kalshi cannot block oversight of prediction markets by Nevada.
   • The court determined that Kalshi sports bets are gambling and not swaps.
   • DraftKings shares rose nearly 10% and Flutter Entertainment shares jumped 8% following the ruling.

   Still unconfirmed

   • The ruling potentially revives a prosecution against Kalshi in Arizona.
   • Prediction platforms are not taxed like gambling because they are licensed by a federal commodity regulator instead of state boards.

   What to watch next

   • A potential appeal or challenge to the ruling at the U.S. Supreme Court
   • Action by Arizona authorities to resume prosecution against Kalshi
   Sources used for this update (13)

   1. CNN — States can regulate prediction markets as gambling, federal appeals court rules
   2. Reuters — Kalshi cannot block Nevada oversight of prediction markets, US appeals court rules
   3. CNBC — U.S. appeals court rules against prediction markets, sets up likely fight at Supreme Court
   4. Ars Technica — Court rules Kalshi sports bets aren’t “swaps,” just gambling with a different name
   5. The New York Times — Prediction Markets Should Be Regulated as Gambling, Appeals Court Says
   6. Arizona Mirror — 9th Circuit sides with states in Kalshi gambling fight, potentially reviving Arizona's prosecution
   7. CBS News — Court hands U.S. states a win in fight over who regulates prediction markets
   8. The Nevada Independent — Federal appeals court allows Nevada to ban Kalshi and other prediction markets
   9. Yahoo Finance — DKNG Soars Nearly 10%, FLUT Jumps 8% — DraftKings, Flutter Entertainment Rally On Ruling That Sports Bets Aren’t Swaps
   10. Newser — It's a Big Win for States Over Prediction Markets
   11. Engadget — US Appeals Court Sides With Nevada In Legal Fight With Kalshi
   12. CNN — ‘This is an all-out war’: Inside the casino industry’s fight to stop prediction markets
   confidence 95%